How will the interest rate rise affect my mortgage?

September 7th, 2018

The recent interest rate rise by the Bank of England is not something for budding home owners to fear.

OK, it is not the record low borrowers have enjoyed over the past ten years but looking at the big picture they are still historically low.

Interest rates are now above their crisis lows for the first time in nearly a decade, pushing up the cost of repayments by around £20-£25 a month for households with a mortgage of £200,000.

But, let’s not forget that for the vast majority of the nineties and noughties interest rates did not drop below 4%.

Figures released last week showed new house mortgages dropped by 4.3% but that doesn’t tell the whole story as Gross mortgage lending for the total market in July rose 7.6% on the year to £24.6bn.

The recent increase was driven by re-mortgaging as homeowners locked into attractive deals in anticipation of the recent base rate rise.

Here at Visionary Finance we are expecting to see that growth continue post interest rate rise. Buyers still have an extremely strong hand. Help to Buy and the Stamp Duty cut is helping first-time buyers.

And the perception of fragile consumer confidence is seeing lenders put forward more attractive deals.

For example, a number of new deals have launched for borrowers looking to buy with a 5 per cent deposit.

HSBC recently cut rates on its 95 per cent mortgage deals while M&S Bank upped its maximum loan-to-value to 95 per cent and its maximum borrowing term to 35 years.

Earlier in the year M&S launched a £1,000 cashback deal for first-time buyers, with a free valuation.

And on new properties, developers too are offering incentives. One of the most recent we have seen was a whopping £2,000 John Lewis voucher on a small two bed flat.

To summarise simply, if you are a first-time buyer or are looking to work your way up the ladder don’t be put off by the interest rate rise.

There are still plenty of opportunities out there. Give us a call so we can talk you through what’s best for you!

Call 01908 465100 or email info@visionaryfinance.co.uk for bespoke advice.